Centzy becomes Locality and announces $4.3M Series A, aims to fix local search once and for all

Here’s a newsflash: most local small businesses still aren’t online. And even for those who are, searching for granular business information like hours of operation, menu of products and services, and pricing remains a fantasy. Sure Google knows the address and phone number of most small businesses. And in rare cases, a PDF or a photograph of a businesses menu may exist on some third-party site like MenuePages, but actually searching through this information is nearly impossible. It sounds like a 2005 problem, and yet, it’s 2013 and these are the facts.

Locality (fka Centzy) has set out to solve this the messy, but unsexy “comprehensive local search” problem. Today, the company announced its expansion to 10,000 US cities and the closing of a $4.3 million Series A funding round led by Matrix Partners. The round brings Locality’s total funding to $6.7 million, with existing investors including Lightbank, ffVC, Cowboy Ventures, and Founder Collective.

Matrix general partner and former Square, Google, and Slide exec Jared Fliesler will join the company’s board of directors. This is Fliesher’s first investment since joining the firm last spring. In conjunction with the completion of its fundraising, Locality is relocating its headquarters and the majority of its team from New York to San Francisco.

One of the reasons this local search problem remains largely unsolved is there is no technology hack for getting this information online and then keeping it up to date, at scale. Locality is simply the first company willing to do the block-and-tackle work of calling millions of small businesses and manually collecting this information – a process it repeats several times per year to capture any changes in a business’ information. Seriously. All so that consumers can search for dry cleaners within a 5 mile radius of their home that are open until 7pm and offer next day services and compare prices and reviews.

“Locality does for local services what Kayak does for air travel,” says co-founder and CEO Jay Shek. “We show consumers every service that's available around them in a way that makes it easy to find the right one for them. ￼Local search represents 43 percent of all internet searches, but less than 10 percent of businesses post their menus, prices, and hours online.”

Today, Locality provides verified information on approximately 1 million local merchants covering 60 local services. Among these categories are things like hair and nail salons, spas, tanning salons, dry cleaners, gyms and yoga studios, chiropractors, dentists, eye doctor, oil change, daycares, preschools, and pet boarding, among others. Shek describes these as “errands,” or high-frequency of use services, excluding exclude restaurants, bars, and complex and expensive services, or those with variable pricing.

According Shek, 90% of Locality’s data is not available anywhere else online. “We recently sampled 700 random nail salons nationwide and found that Locality listed operating hours for twice the number of these businesses as Google,” he says. Nearly all its pricing data is proprietary.

Locality’s traffic has grown tenfold in the last year to more than 1.5 million monthly unique users, according to its founder. Two-thirds of this usage occurs on mobile devices – the company offers a responsive website and plans to introduce native apps in the near future. More than 75 percent of the company’s users come from outside the nation’s 10 largest cities, Shek says, explaining that traditional search is far weaker in its coverage in these second-order markets. The company’s current audience skews female, between the ages of 18 to 44, and above average income. Given the high-intent nature of local-search, this is a highly attractive demographic to be able to deliver to merchants.

Despite the fact that Locality manually calls many of its merchants to collect or verify information, the company believes that it has a scalable data collection system that will allow it to enter new markets and scale rapidly. Whether that system is economically efficient is another question. Thus, long-term, the company aims to use technology to automate as much of this data collection as possible, something that will be difficult given the limited technical sophistication of many local merchants. These tools will include a merchant dashboard that allows them to edit their own information, as well as post advertisements.

Shek describes the evolution of local search category as moving from online listings, like YP.com, to the mapping layer, dominated by Google, to reviews, like those on Yelp, to finally comprehensive and objective data that Locality aims to provide. There are several companies competing in this local data collection space, but none before Locality have shown a willingness to actually pick up the phone and ask merchants for detailed information.

Factual has seemingly gathered more places data than anyone and licenses this database to power services like Yelp, Foursquare, and Facebook Places, among others, but most of this data comes from scraping the Web, user-generated content, and data sharing partnerships with third-party platforms. But even Factual doesn’t know what services a hair salon offers, its prices, and how its services compare to a nearby competitor. Locu (acquired by GoDaddy this year) comes closer, but is heavily concentrated in the restaurant vertical and only has data for the small fraction of businesses that have shown the initiative to manually upload their information to its database in exchange for Locu distributing it across the Web. The newest generation of competitor comes from appointment booking services like MyTime, MindBodyOnline, and StyleSeat, but these services focus less on data gathering and business-comparison, than on calendaring.

One of the biggest challenges for startups tackling the “local” category, is that most merchants have reached fatigue around trying out new technology products and services. Nearly all have been contacted by a half dozen or more daily deals, loyalty, and online marketing platforms all promising to deliver them more business – few have lived up to these promises. The problem is worse in major cities like San Francisco, Los Angeles, and New York. Shek says that overcomes this obstacle more easily than many of its competitors because most merchants have already received a customer from the service, even before agreeing to verify their information. The company also enters each data collection call armed with data on Locality search activity in the business’ category and immediate area, he says.

It’s still rather shocking that the local search problem hasn’t already been solved. And yet, here we are, talking about a company raising millions of dollars to do just that. But while much of the world has moved into an always connected, digital-first reality, the majority of small businesses have not. And thus, Locality has a very real challenge ahead of it in gathering and organizing relevant business information to make it searchable by consumers. If the company can successfully conquer the local search problem, it could would be in a position to become the next Yelp.